Suppose That the Production of a Good Causes Negative Externalities

question 124

Multiple Choice

Suppose that the production of a good causes negative externalities. What will happen if the good is produced at the level at which the marginal private cost curve meets the demand curve?

• A)The level of output will be socially desirable.
• B)The level of output will result in a net social cost.
• C)There will be a surplus.
• D)The producers will incur losses.
• E)There will be no buyer in the market.

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